Warner/Chappell Bids on Black Music House : Entertainment: The $20-million offer for the Mighty Three Music company reflects rapidly expanding opportunities to market songs.

In a bid for one of the last major independent black music catalogues outside Motown, Warner/Chappell Music Inc. has offered to pay about $20 million for a company that owns the copyrights to songs performed by such artists as the O’Jays, Stylistics and Teddy Pendergrass, sources familiar with the talks say.

Los Angeles-based Warner/Chappell’s offer for the estimated 3,000-song catalogue of Mighty Three Music of Philadelphia dramatizes the scramble to snap up even small music publishing companies. It is a reaction to the rapidly expanding opportunities to market songs in movies, television advertising and other outlets.

Only a small percentage of the 3,000 songs owned by Mighty Three, which had estimated revenue of $820,000 in 1988, sold more than 1 million copies after they were first recorded. But sources say Warner/Chappell believes that it can successfully market such catchy tunes as the O’Jays’ 1974 hit “For the Love of Money,” which resurfaced on television two years ago in a Nissan car commercial.

Leslie E. Bider, chief executive of Warner/Chappell Music, could not be reached for comment. Mighty Three’s lawyer, Phil Asbury, confirmed that there has been an offer but said the company “has not been sold.”

Several parties have sought to buy Mighty Three since founders Thomas R. Bell, Kenny Gamble and Leon Huff reluctantly put it up for sale this year, said an industry lawyer who had been negotiating with the company.

But a source at Mighty Three said company officials have negotiated seriously with only Warner/Chappell since it submitted a written offer last month.

Although the company source would not disclose the size of the offer, other sources say it is about $20 million. The company source also said the owners are seeking an arrangement in which they retain a financial interest in the company.

“A lot of their life is tied up in the company, and I think they have mixed feelings about parting with it,” an official close to the company said.

Mighty Three Music was launched around 1970 when Philadelphia producer Bell joined with songwriters Gamble and Huff to become one of the foremost proponents of the pop-disco Philadelphia Sound. The sound was heard primarily on records released on the Philadelphia International and Philly Groove labels.

Music publishing firms such as Mighty Three were once considered the Plain Janes of the entertainment world. But prices for music publishing companies have skyrocketed since singer Michael Jackson spotlighted them five years ago by paying $50 million for a British company that controlled the copyrights to nearly all the Beatles’ songs, experts say.

Last year, London-based EMI Music paid $295 million for the 250,000-song catalogue of SBK Entertainment World, and Sony Corp.’s CBS Records unit paid about $40 million for country music publisher Tree International’s 35,000 songs.

Meanwhile, Motown Records founder Barry Gordy Jr. is reportedly seeking $200 million for Jobete Music, the Los Angeles concern that owns the copyrights to about 15,000 songs recorded for Motown.